Should You Buy JINS HOLDINGS Inc. (TSE:3046) For Its Upcoming Dividend?
JINS HOLDINGS Inc. (TSE:3046) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase JINS HOLDINGS' shares before the 28th of August to receive the dividend, which will be paid on the 30th of November.
The company's upcoming dividend is JP¥68.00 a share, following on from the last 12 months, when the company distributed a total of JP¥115 per share to shareholders. Based on the last year's worth of payments, JINS HOLDINGS has a trailing yield of 1.8% on the current stock price of JP¥6380.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see JINS HOLDINGS paying out a modest 30% of its earnings. A useful secondary check can be to evaluate whether JINS HOLDINGS generated enough free cash flow to afford its dividend. It paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.
It's positive to see that JINS HOLDINGS's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
See our latest analysis for JINS HOLDINGS
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see JINS HOLDINGS has grown its earnings rapidly, up 38% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. JINS HOLDINGS has delivered 14% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Should investors buy JINS HOLDINGS for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, JINS HOLDINGS paid out less than half its earnings and a bit over half its free cash flow. JINS HOLDINGS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
So while JINS HOLDINGS looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for JINS HOLDINGS you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.